The more you earn, the more you pay: this is the principle of progressive income tax. The households are thus divided into the 5 sections of the progressive scale. Are you in good company there?
Stop misunderstanding! The rates of the income tax scale, 11%, 30%, 41% and 45%, are not the rates applied to all of your income. A taxpayer in the upper bracket, 45%, does not pay exactly 45% of his income to the Treasury. The bar applies as a 5 slice sandwichgradually increasing according to the level of resources: with the 2023 scale, which will apply to 2022 income, a single person with high incomes will pay 0% on 10,777 euros of net taxable income, then 11% up to 27,478 euros, 30% up to ‘78,570 euros, 41% up to 168,994 euros and 45% on everything that exceeds this last threshold.
| Income bracket per tax share | Applicable rate for the tranche |
|---|---|
| Up to 10777 | 0% |
| From 10777 27478 | 11% |
| From 27478 78570 | 30% |
| From 78570 168994 | 41% |
| Over 168994 | 45% |
Barme revalued on the basis of an annual inflation of 5.4%.
Provisional scale, subject to adoption of the finance bill for 2023.
Income tax: how much less will you pay in 2023 thanks to the new scale?
Must therefore distinguish average rate and marginal tax rate: this year a single person declaring 100,000 euros of salary to the tax authorities is indeed in the 41% bracket but his average rate (and rate of deduction at source) is 22.6%. This means that 22.6% of his net taxable income (90,000 euros, after the 10% deduction for professional expenses) is punctured by the tax authorities: 22,622 euros in tax. What about the 41%? This is his marginal tax rate (TMI), the rate applied to the top slice of his resource sandwich.
Nearly 1 in 2 households in the 11% bracket!
The Directorate General of Public Finances (DGFiP) reveals in its abundant statistics how the nearly 40 million tax households in France are distributed.
| Marginal rate income tax | Number of households | Distribution of French households |
|---|---|---|
| 0% | 13.1million | 33% |
| 11% | 19.8million | 49.7% |
| 30% | 6.4million | 16% |
| 41% | 426000 | 1.1% |
| 45% | 63000 | 0.2% |
Source: Ministry of Economy, Finance and Recovery – DGFiP
2021 tax statistics on 2020 income
Surprise: nearly 50% of households appear in the slice 11%! astonishing since only 44% of households pay income tax… A few million households therefore fall into this bracket at 11% of the scale, but the play of tax credits and reductions, and of the discount reducing or eliminating the tax of the middle classes, leave many hearths of the panel of taxable persons. Finally, the tax authorities do not levy anything if the annual tax does not exceed the bar of 61 euros.
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At the other end, 63,000 households, i.e. 0.2% of households, are affected by the upper bracket of the tax scale, 45%. But how much pay the French appearing in these 5 slices?
| Marginal rate income tax | Number of households | Average amount per household |
|---|---|---|
| 0% | 13.1million | – 46 |
| 11% | 19.8million | 507 |
| 30% | 6.4million | 6176 |
| 41% | 426000 | 34953 |
| 45% | 63000 | 159873 |
Source: Ministry of Economy, Finance and Recovery – DGFiP
2021 tax statistics on 2020 income
Income tax: how much do the richest pay?
First lesson: through tax credits, the amount of 33% of households with margins in the 0% bracket is negative. This means that the tax authorities pay them an average of 46 euros per year in income tax credits. And that the 6.4 million households (16%) whose TMI is 30% pay an average of 6,176 euros in annual tax.
Knowing your TMI, what is the point?
Please note that the scale applies to income by tax share, therefore after application of the family quotient in the case of a couple or dependent children. Which obviously complicates the quest for your TMI…
More informations: What brackets apply to your income?
On your personal space on impots.gouv.fr, the DGFiP highlights your withholding tax rate, and not the marginal tax rate (TMI). This TMI appears in particular on the public income tax calculatoror obtained with MoneyVox.
What is the use of knowing your TMI? It is mainly useful for savings and tax exemption products. Because trimming part of your 2022 income by tax exemption will allow you to reduce the top slice of your tax sandwich. For example, placing 1,000 euros in a retirement savings plan (PER) if you have a TMI of 41% allows you to save, fiscally speaking, 410 euros, because you limit your taxable income bracket to 41%.
The PER, an investment for the rich?